#6 For the following questions, use the Excel file posted in Canvas. The Excel file is called "Solow Model Simulator.xlsx" and can be found in the PowerPoints link or in the Assignments page under Problem Set #4. Part a) (2 points) Open the Excel file and you can see there are different tabs. The first tab, "Actual Steady State Values" gives starting values for the parameters (d, s, A, α) and the re- sulting steady-state values of k, y, i, and c. Note the values are smaller than some of our class examples because they are in hourly rather than annual amounts. The next tab "Approaching the Steady State" uses those parameters to program a series of equations which generate values to simulate how k, y, i, and c adjust to get to their steady state values over time. It shows this by using a low starting value for capital (k = 25.00 in row 2), computing Aki - dk and then adding that amount of change in capital to the next period's capital stock. Each of the rows then show a different stage of adjustment as the economy approaches the steady state from a recent to later time period. (Note that the variables will eventually converge to their steady state values which are already computed in the "Actual Steady State Values" tab.) Use these Excel sheets to answer the question: How does a higher saving rate affect the steady states of y, k, i and c? To do this, go to the "Increase in s" tab and change the saving rate. You need to increase the saving rate from 4.9% to something higher. Report what you set the saving rate to and describe what happens to the steady state values. Make a rough sketch of the graph you produced or cut-and-paste it into a Word document. What is the graph showing you? What happens to y, k, i and c initially and why is that happening? Part b) (2 points) When you change the A parameter in the tab titled "Actual Steady State Values," how does it affect the variables? To answer this question, change your s back to 0.049 and increase A from 9.6 to 10.6.

#6 For the following questions, use the Excel file posted in Canvas. The Excel file is called "Solow Model Simulator.xlsx" and can be found in the PowerPoints link or in the Assignments page under Problem Set #4. Part a) (2 points) Open the Excel file and you can see there are different tabs. The first tab, "Actual Steady State Values" gives starting values for the parameters (d, s, A, α) and the re- sulting steady-state values of k, y, i, and c. Note the values are smaller than some of our class examples because they are in hourly rather than annual amounts. The next tab "Approaching the Steady State" uses those parameters to program a series of equations which generate values to simulate how k, y, i, and c adjust to get to their steady state values over time. It shows this by using a low starting value for capital (k = 25.00 in row 2), computing Aki - dk and then adding that amount of change in capital to the next period's capital stock. Each of the rows then show a different stage of adjustment as the economy approaches the steady state from a recent to later time period. (Note that the variables will eventually converge to their steady state values which are already computed in the "Actual Steady State Values" tab.) Use these Excel sheets to answer the question: How does a higher saving rate affect the steady states of y, k, i and c? To do this, go to the "Increase in s" tab and change the saving rate. You need to increase the saving rate from 4.9% to something higher. Report what you set the saving rate to and describe what happens to the steady state values. Make a rough sketch of the graph you produced or cut-and-paste it into a Word document. What is the graph showing you? What happens to y, k, i and c initially and why is that happening? Part b) (2 points) When you change the A parameter in the tab titled "Actual Steady State Values," how does it affect the variables? To answer this question, change your s back to 0.049 and increase A from 9.6 to 10.6.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter5: Business And Economic Forecasting

Section: Chapter Questions

Problem 1.2CE: Plot the logarithm of arrivals for each transportation mode against time, all on the same graph....

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